THE KOREA ECONOMIC DAILY, GLOBAL EDITION

SeAH Group, South Korea’s major steel group said to be a steel supplier to SpaceX, is set to foray deeper into the US, the world’s biggest specialty metal market, with a $155.3 million investment to build a special alloy plant amid the escalating global space race.

SeAH Besteel Holdings Corp. announced in a regulatory filing on Thursday that its board approved a plan to spend $155.3 million in total to build a special alloy plant in the US, which would be the first such plant built by a Korean company in the US.

SeAH Besteel Holdings will chip in $46.7 million to buy 46,658 new shares of SeAH Global Holdings Inc. to fully own the company, while its wholly owned subsidiary SeAH Changwon Integrated Special Steel Corp. (SeAH CSS) will invest $108.6 million to own redeemable convertible preferred shares (RCPS) in SeAH Supperalloy Technologies LLC.

SeAH Global Holdings and SeAH Supperalloy Technologies are new entities set up in the US this year to build the specialty metal plant. The latter is the special alloy manufacturing unit.

SeAH CSS manufactures high-tech industrial materials, including special alloys, and it joined SeAH Group after the latter acquired formerly POSCO Specialty Steel in 2015.

SeAH’s total investment in the US specialty metal manufacturing facilities is greater than SeAH Besteel Holdings’ consolidated operating profit of 196.7 billion won ($146.1 million) for 2023.

The company said it will determine the US plant's site soon.

Once the factory’s construction is completed it is expected to churn out 6,000 tons of special alloys annually, according to the company.

DEEPER FORAY INTO THE US SPACE MARKET

The upcoming US special alloy manufacturing facilities are expected to enable SeAH to more quickly and deeply penetrate the US space industry, which is the world’s No. 1 in space technology, with aerospace and defense household names such as Boeing Co., Lockheed Martin Corp., GE Aerospace and Pratt & Whitney.

Special alloys are high-performance metals made with a mixture of specialty materials such as nickel, titanium, cobalt and aluminum.

Demand for such specialty metals mainly comes from the aerospace, defense and space industries thanks to their high-temperature strength, toughness, corrosion resistance and weight.

While non-specialty steels are melted at 1,500 degrees Celsius, these specialty metals can withstand temperatures of 1,900 degrees and higher.

They are the most high-value added metals among steel products, delivering higher margins to SeAH CSS than its mainstay stainless steel and carbon alloy products.

Special alloys currently account for about 4% of SeAH CSS’s total sales, and their portion is expected to jump once the new specialty metal plant is built in the US.

As of 2021, the US was the world’s No. 1 specialty metal market, accounting for 40% of global special alloy sales thanks to the global top-tier aerospace, defense and space companies based in the country.

According to Allied Market Research, the global special alloy market is forecast to more than double to $15 billion in 2031 from $6.8 billion in 2021.

BEYOND SPACEX

SeAH CSS also may be able to expand its specialty metal supplies to SpaceX after the new US factory is complete.

The Korean high-tech industrial materials maker was rumored to be in talks with SpaceX early last year to supply its specialty metals for SpaceX’s rockets and satellites.

An unnamed official in the industry said that SeAH CSS has reportedly started supplying its products to the US spacecraft company under Tesla Inc.’s Elon Musk. 

SeAH CSS declined to confirm whether it has already bagged orders of such steel products from SpaceX. 

SeAH Group first set foot in the US steel manufacturing scene in 2016 after SeAH Steel Holdings Corp. acquired a steel pipe factory there. The upcoming special alloy factory will be its second steel manufacturing plant in the US.

The plant is expected to ease uncertainties over US tariffs on Korean special alloy imports. The world’s largest economy does not impose tariffs on Korean special alloy imports now but that could change at any time amid ongoing trade rows between the US and China.

It is also expected to help reduce logistics costs and expand the company's network with US customers.

“The special alloy market has high barriers to entry as it requires advanced technology for manufacturing,” said a SeAH official. “The company will expand its presence in the global specialty metal market centered around the US.”

SeAH Besteel Holdings stock added 2.9% to 24,550 won on Thursday.

Write to Hyung-Kyu Kim at khk@hankyung.com

Sookyung Seo edited this article.